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2015 (10) TMI 968 - AT - Central ExciseClandestine removal of goods - Penalty under Rule 26 - Evasion of duty - Insufficient evidences - Trading activity - Violation of principle of natural justice - Difference of opinion - Majority order - Held that - no credence can be paid to the capacity determined in 1999 under the compounded levy scheme. Capacity was not determined during the period in question. Duty is to be demanded from the appellant for clandestine clearances based upon available evidences. - While it is true that the appellant, Gautam Enterprises and Shiv Parvati Enterprises were doing some trading activities, however, the appellant has not been able to produce any tabulation or any record or any details even from record No. 23, 24, 26 or any other record that the total quantity of MS ingots purchased clandestinely were traded. In view of this position, it cannot be presumed that the whole of MS ingots which were clandestinely cleared and purchased were used for trading activity. Clandestine purchase of MS ingots was not from one source but from number of sources and at times through brokers. Suppliers of MS ingots as also brokers had confirmed the correctness of the information indicated in the diaries recovered from the appellant s office in Mumbai. It is also noted that majority of the supplier of MS ingots in turn have paid the duty for the clandestinely cleared MS ingots to the present appellant. In such a situation, in my considered view, as far as the purchase of clandestinely cleared MS ingots is concerned, there can be no doubt and is proved. - The diaries recovered from Shri Faruk Shaikh indicated the purchase of clandestinely cleared MS bars during the period 2005-06 and 2006-07 (upto December 2006 i.e. the time of search). It was found that the diary contained precise information about the date, quantity and rate etc. It was also found that the said diaries contained the information of both types of clearances i.e .with bill and without bills. The Revenue has demanded the duty on the goods cleared without bill. In his statements during investigation, Shri Faruk Shaikh has admitted the details. It is also important to note that Shri Faruk Shaikh along with the diaries was apprehended during the search at the appellant s factory itself. All the MS bars which are shown as cleared without bills from the appellant s unit, were in reality cleared from the appellant s unit without payment of duty and the duty on the same is required to be confirmed. The quantity indicated for 2005-06 is 188.78 MT. During 2006-07 upto June, the same is 81.700 MT and from July to December 2006, the quantity is 352.770 MT. Duty, interest and penalties for clandestine clearance for these clearances is required to be computed. The second part of the demand is based upon the statement of various buyers of the appellant company - as far as these clearances are concerned, since these are based upon documentary evidence along with the statements and the documentary evidence has been recovered from the appellant s own office and the appellant has admitted the details in these records, the same are required to be confirmed and the appellant is liable to pay duty, interest and consequential penalty on the same. These will be required to be recomputed by original authority. Personal penalties will also be required to be proportionately redetermined including the clearance through Shri Farukh Shaikh. - evidences collected by the investigation team during the course of investigation are sufficient to prove the charge of clandestine removal - The remaining demand is not sustainable for want of evidence. The details written in the documents were very precise which includes dates, supplier s name, broker s name, exact quantity, rate etc. In most of the statements, all that was done was to explain or confirm the details already indicated in the document and the case of the Revenue is based upon such document. Even if we ignore the statements, the only conclusion from the documents particularly regarding procurement of clandestinely cleared goods will be what has been proposed by the Revenue. Only in respect of some of the buyers of MS bars, though in the statements they have accepted purchase of clandestinely cleared MS bars, but Revenue has failed to point out the corresponding entries in record No. 23, 24 and 26 and as mentioned with reference to point No. 2 of the difference of opinion, the demand in respect of the same cannot be upheld. - adequate opportunity was given and further cross-examination was not requested especially on the last date of hearing by the advocate and also relying his decision on the case of Surjit Singh Chhabra (1996 (10) TMI 106 - SUPREME COURT OF INDIA). I do not think that there has been any violation of the principles of natural justice in the present facts and circumstances of the case. - Decided against assessee.
Issues Involved:
1. Clandestine removal of TMT/CTD bars by the appellant. 2. Production capacity of the appellant's factory. 3. Adequacy of evidence and cross-examination. 4. Violation of principles of natural justice. Detailed Analysis: 1. Clandestine Removal of TMT/CTD Bars: The main appellant, M/s Shri Salasar Ispat Pvt. Ltd., was accused of evading duty by clandestinely removing TMT/CTD bars. The Directorate General of Central Excise Intelligence (DGCEI) conducted raids and recovered documents from the premises of Gautam Enterprises in Mumbai, which were alleged to be linked to the appellant. These documents indicated transactions involving the purchase of M.S. ingots and the sale of TMT/CTD bars without proper excise documentation. Statements from various brokers and suppliers initially supported these allegations, but many were later retracted, claiming duress. The appellant argued that the documents were not in their handwriting and that the records pertained to trading activities of other firms. 2. Production Capacity: The appellant contended that their factory's production capacity was fixed at 4441 MT per year in 1998 and had not changed. They argued that it was impossible to produce the alleged quantity of 7697.010 MT within six months. The department, however, did not verify the production capacity or electricity consumption patterns to support their claims. The tribunal noted that the production capacity could vary based on operational hours and raw material usage, and the capacity determined in 1999 under the Compounded Levy Scheme was not relevant for 2006. 3. Adequacy of Evidence and Cross-Examination: The tribunal found that the evidence of clandestine removal was primarily based on private records and statements, many of which were retracted. The appellant was not granted cross-examination for all the witnesses whose statements were relied upon, which was argued to be a violation of Section 9D of the Central Excise Act, 1944. The tribunal noted that the department failed to provide corroborative evidence such as transportation records, octroi receipts, or changes in production patterns and electricity consumption. 4. Violation of Principles of Natural Justice: The tribunal observed that the principles of natural justice were violated as the appellant was not provided with adequate cross-examination opportunities. The tribunal referred to the decision in Basudev Garg v. CC, which emphasized the necessity of cross-examination unless exceptional circumstances existed. Judgment: The tribunal, by majority opinion, held that the department failed to conclusively prove the clandestine removal of the alleged quantity of TMT/CTD bars. The evidence presented was insufficient to establish the charges beyond doubt. The tribunal set aside the impugned order, allowing the appeals and quashing the penalties imposed on the appellants. The judgment highlighted the need for concrete evidence and adherence to principles of natural justice in adjudication processes.
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